Revocable Living Trust

What is a Trust? Imagine it as a box in which you put all your assets and upon your death, the assets in that box will go to your beneficiaries without the probate process. The trustees will take care of the transfer of your assets to the designated beneficiaries. With a Revocable Living Trust, you retain the ability to make changes to the trust as you see fit throughout your life.

We will go over the following topics in this article.

• Key elements of the trust
• Funding the trust
• Guardianship for minor children

Key elements of the trust

The 5 key elements of the trust are.

1. Declaration of Trust: This is the foundational statement in a trust document, formally establishing the trust's existence, its purpose, and the terms under which it operates.
2. Grantor(s) Information: Identifies the individual(s) who create the trust, outlining their intention to transfer assets into the trust for management and distribution according to the trust's terms.
3. Trustee(s) and Successor Trustee(s) Information: Lists the appointed primary trustee responsible for managing the trust's assets and any successor trustees who will take over if the primary trustee is unable to serve. Normally the primary trustee will be you and your spouse and successor trustees are the ones you appoint to take care of distributing the assets to your beneficiaries.
4. List of Assets to be Held in Trust: A detailed inventory of the assets (e.g., real estate, bank accounts, investments) that are placed into the trust for management and benefit of the beneficiaries. If you wish to distribute everything to your surviving spouse and children, then you need not list all your assets at the time of forming that trust. The trust instructions can say, everything goes to surviving spouse and children and after funding the trust you can inform the list of assets to the trustees in whatever format you are comfortable with (Send them an excel with the list of assets so they are aware).
5. Distribution Instructions: Specifies the guidelines for how and to whom the trust's assets will be distributed, including any conditions or timelines that beneficiaries must meet to receive their distributions. If everything goes to surviving spouse and the children, then the instruction can be very generic and need not have the details of each asset.

Funding the trust

Just listing the assets in the trust is not enough. The ownership of the accounts listed should be changed to the trust name. This is the step many people miss. They just create the trust and miss-out on funding the trust. If the trust is not funded, then all the assets must go through the probate process, and it defeats the main purpose of creating a trust.

To transfer bank accounts into a trust, you typically need to provide your bank with a copy of the trust agreement and complete any required forms. The accounts will then be retitled in the name of the trust.

For real estate, you'll need to execute a new deed transferring the property from your name to the trust's name. This deed must be notarized and recorded with the county recorder's office or other appropriate government body where the property is located.

Guardianship for minor children

The responsibility of the trustees is to make sure the assets are properly transferred to the beneficiaries. The trustee's responsibility doesn't include providing care for the minor children. The guardians for the minor children need to be mentioned in the will ... Yes, you heard it right. The trust needs to be supplemented with a will where you specify the guardians for minor children. We will discuss the approach of having a trust with a pour over will in upcoming weeks.

That's a wrap this week. Happy learning !!